<PAGE>

                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549
                              --------------------

                                    FORM 10-Q
                                   (Mark One)

[X] Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange
Act of 1934 For The Quarter Ended July 31, 2004, or

[_] Transition report pursuant to Section 13 or 15(d) of the Securities Exchange
Act of 1934 For The Transition Period from _______to_______


                         Commission File Number 1-14503




                           DECTRON INTERNATIONALE INC.
                ------------------------------------------------
             (Exact name of registrant as specified in its charter)

<TABLE>
<S>                                                                              <C>
------------------------------------------------------------------- ----------------------------------------------------------------

                          Quebec, Canada                                                          N/A
------------------------------------------------------------------- ----------------------------------------------------------------
(State of Incorporation or other Jurisdiction of                                  (I.R.S. Employer Identification No.)
Incorporation or Organization)
------------------------------------------------------------------- ----------------------------------------------------------------

------------------------------------------------------------------- ----------------------------------------------------------------
                   4300 Poirier Blvd., Montreal                                                 H4R 2C5
------------------------------------------------------------------- ----------------------------------------------------------------
             (Address of principal executive offices)                                          (Zip Code)
------------------------------------------------------------------- ----------------------------------------------------------------
</TABLE>


Registrant's telephone number, including area code: (514) 334 9609

Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes [X] No [ ]

Indicate by check mark whether the registrant is an accelerated filer (as
defined in Rule 12b-2 of the Exchange Act). Yes [ ] No [ X ].


                      APPLICABLE ONLY TO CORPORATE ISSUERS

As of September 10, 2004, there were 3,155,000 shares of common stock
outstanding.


<PAGE>



DECTRON INTERNATIONALE INC.


PART I - FINANCIAL INFORMATION

Item 1.  Financial Statements..............................................1

Item 2.  Management's Discussion and Analysis of
          Financial Condition and Results of Operations....................1

Item 3.  Quantitative and Qualitative Disclosures About Market Risk........5

Item 4.  Controls and Procedures...........................................5


PART II - OTHER INFORMATION


Item 1. Legal Proceedings..................................................6

Item 2. Changes in Securities and Use of Proceeds..........................6

Item 3. Defaults Upon Senior Securities....................................6

Item 4. Submission of Matters to a Vote of Security Holders................6

Item 5. Other Information..................................................6

Item 6. Exhibits and Reports on Form 8-K...................................6


SIGNATURES.................................................................7


                                       i

<PAGE>



                SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS


         Certain statements contained herein including, without limitation,
those concerning (i) the strategy of Dectron Internationale Inc. ("Dectron"),
(ii) Dectron's expansion plans and (iii) Dectron's capital expenditures, contain
forward-looking statements (within the meaning of Section 27A of the Securities
Act of 1933, as amended (the "Securities Act") and Section 21E of the Securities
Exchange Act of 1934, as amended (the "Exchange Act") concerning Dectron's
operations, economic performance and financial condition. Because such
statements involve risks and uncertainties, actual results may differ materially
from those expressed or implied by such forward-looking statements. Factors that
could cause such differences include, but are not limited to, those discussed
under the caption "Management's Discussion and Analysis of Financial Condition
and Results of Operations." Dectron undertakes no obligation to publicly release
the result of any revisions to these forward-looking statements that may be made
to reflect any future events or circumstances.



                                       ii


<PAGE>



                          PART I. FINANCIAL INFORMATION



ITEM 1.  FINANCIAL STATEMENTS

See Pages F-1 through F-11.

ITEM 2.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
         OF OPERATIONS

CRITICAL ACCOUNTING POLICIES

Our consolidated financial statements are prepared in accordance with accounting
principles generally accepted in the United States (GAAP). These accounting
principles require us to make certain estimates, judgments and assumptions. We
believe that the estimates, judgments and assumptions upon which we rely are
reasonable based upon information available to us at the time that these
estimates, judgments and assumptions are made. These estimates, judgments and
assumptions can affect the reported amounts of assets and liabilities as of the
date of the financial statements, as well as the reported amounts of revenues
and expenses during the periods presented. To the extent there are material
differences between these estimates, judgments or assumptions and actual
results, our financial statements will be affected. The significant accounting
policies that we believe are the most critical to aid in fully understanding and
evaluating our reported financial results include the following:

o Revenue Recognition
o Deferred Revenue
o Intangible Assets and Goodwill
o Foreign currency translation
o Accounting for Income Taxes

REVENUE RECOGNITION
We recognize revenue for finished products when the goods are shipped and title
passes to the customer, provided that there are no uncertainties regarding
customer acceptance, persuasive evidence of an arrangement exist; the sales
price is fixed or determinable; and collectibility is deemed probable.

DEFERRED REVENUE
We have sold extended warranty contracts covering a period of four to nine years
beyond the one year basic guarantee. The deferred revenue is recognized as
income over the four to nine year period on a straight-line basis commencing one
year from the sale of the contracts.

INTANGIBLE ASSETS AND GOODWILL
We account for intangible assets and goodwill in accordance with Statement of
Financial Accounting Standards (SFAS) 142, "Goodwill and Other Intangible
Assets", which we adopted on February 1, 2002. In accordance with that
statement, goodwill and intangible assets with indefinite lives are no longer
amortized, but rather tested for impairment at least annually. Intangible assets
with estimable useful lives, consisting of patents, trademarks, and rights, are
amortized on a straight-line basis over the estimated useful lives of 5 to 15
years, and are reviewed for impairment in accordance with SFAS 144, "Accounting
for the Impairment of Long-Lived Assets".

Goodwill represents the excess of purchase price over the fair value of
identifiable assets acquired in a purchase business combination. -. Goodwill and
intangible assets with definite lives are tested annually for impairment in
accordance with the provisions of SFAS 142.

Impairment of goodwill is tested at the reporting unit level by comparing the
reporting unit's carrying amount, including goodwill, to the fair value of the
reporting unit. The fair values of the reporting units are estimated using a
combination of the income or discounted cash flows approach and the market
approach, which utilizes comparable companies' data. If the carrying amount of
the reporting unit exceeds its fair value, then a second step is performed to
measure the amount of impairment loss, if any. Any impairment loss would be
expensed in the consolidated statements of earnings. The impairment test for
intangibles with indefinite useful lives consists of a comparison of the fair
value of the intangible assets with its carrying amount. When the carrying
amount of the intangible assets exceeds its fair value, an impairment loss would
be recognized for the difference.


<PAGE>

Intangible assets with estimable lives and other long-lived assets are reviewed
for impairment when events or changes in circumstances indicate that the
carrying amount of an asset or assets group may not be recoverable in accordance
with SFAS 144. Recoverability of intangible assets with estimable lives and
other long-lived assets is measured by a comparison of the carrying amount of an
assets or asset group to future net undiscounted pretax cash flows expected to
be generated by the assets or asset group. If these comparisons indicated that
an asset is not recoverable, the impairment loss recognized is the amount by
which the carrying amount of the asset or the asset group exceeds the related
estimated fair value.

FOREIGN CURRENCY TRANSLATION
We maintain our books and records in Canadian dollars. Foreign currency
transactions are translated using the temporal method. Under this method, all
monetary items are translated into Canadian funds at the rate of exchange
prevailing at balance sheet date. Non-monetary items are translated at
historical rates. Income and expenses are translated at the rate in effect on
the transaction dates. Transaction gains and losses are included in the
determination of earnings for the year.

The translation of the financial statements from Canadian dollars into United
States dollars is performed for the convenience of the reader. Balance sheet
accounts are translated using closing exchange rates in effect at the balance
sheet date and income and expense accounts are translated using an average
exchange rate prevailing during each reporting period. No representation is made
that the Canadian dollar amounts could have been, or could be, converted into
United States dollars at the rates on the respective dates and or at any other
certain rates. Adjustments resulting from the translation are included in the
accumulated other comprehensive income in stockholder's equity.

INCOME TAXES
As part of the process of preparing our financial statements, we will be
required to estimate our income taxes in each of the jurisdictions in which we
operate. This process will involve estimates of our actual current tax exposure
together with assessing temporary differences resulting from differing treatment
of items, such as depreciation and amortization, for tax and accounting
purposes.

RESULTS OF OPERATIONS

Six month period ended July 31, 2004 compared to six month period ended July 31,
2003.

         Revenues for the six month period ended July 31, 2004 were $
21,217,255, a 0.25% decrease over prior year revenues of $ 21,271,441. Sales in
the Canadian market were adversely affected by the Annual shutdown of work sites
during the last 2 weeks of July.

         Gross profit decreased by $ 1,109,521 to $ 6,015,964 over the same
period. As a percentage of revenues, gross profit decreased from 33.5% to
28.35%. Gross profit was adversely affected by higher cost in raw material and
the use of aggressive pricing strategies in the commercial HVAC markets

         Selling expenses decreased by $ 238,579 in the six month period ended
July 31, 2004. As a percentage of revenues, selling and marketing expenses
decreased from 12.46 to 11.36%.

         General and administrative expenses decreased by $ 138,708 to $
1,456,886. As a percentage of revenues, general and administrative decreased
from 7.5% to 6.87%.

         Selling and administrative expenses decreased due to an improvement in
cost control exerted by Management.


                                       2
<PAGE>


         Amortization expenses increased to $ 618,736 in the six month period
ending July 31, 2004 compared to $ 598,558 in 2003 following the acquisition of
new machinery and equipment during the last fiscal year. As a percentage of
revenues, amortization expenses increased from 2.81% to 2.92%.

         Financing expenses increased from $ 167,910 to $ 601,250 due mainly to
the effects of foreign exchange variations. As a percentage of revenues,
financing expenses increased from 0.79% to 2.83%.

         Provisions for Income tax as a percentage of taxable income decreased
from 31.87% for the six months ended July 31, 2003 to 31.15% for 2004. Tax
expenses have decreased by $384,645 due to a decrease in taxable revenue.

         Net earnings before discontinued operations was $ 638,883. As a
percentage of sales, net earnings before discontinued operations decrease from
6.77% to 3.01%.

         Losses from discontinued operations net of taxes for the six month
period ending July 31, 2004 was $ 949,805 compared to $ 1,359,816 in the
corresponding period in 2003.

         Gain on disposal of discontinued operations was $ 550,676 for the six
month period ended July 31, 2004 compared to $48,320 in 2003. This increase
results from the disposal of Ipac 2000 Inc.

         As a result of the above factors, net earnings in the six month period
ending July, 31,2004 was $ 239,754 compared to earnings of $128,494 in the
corresponding period in 2003. The increase in earnings is partly due to the
sales of discontinued operations of Ipac 2000 Inc.

Three month period ended July 31, 2004 compared to Three month period ended July
31, 2003.

         Revenues for the three month period ended July 31, 2004 were $
10,988,159, a 5.43% decrease over prior year revenues of $ 11,619,589. Sales in
the Canadian market were aversely affected by annual shut down of work sites
during the last 2 weeks of July, and aggressive pricing in the commercial HVAC
markets

         Gross profit decreased by $ 877,303 to $ 2,745,525 over the same
period. As a percentage of revenues, gross profit decreased from 31.18% to
24.99%. Gross profit was adversely affected by higher cost in raw material and
the use of aggressive pricing strategies in the commercial HVAC markets

         Selling expenses decreased by $ 189,396 in the three month period ended
July 31, 2004. As a percentage of revenues, selling and marketing expenses
decreased from 11.91% to 10.87%.

         General and administrative expenses decreased by $ 40,140 to $ 785,182.
As a percentage of revenues, general and administrative increased from 7.1% to
7.15%.

         Selling and administrative expenses decreased due to an improvement in
cost control exerted by Management in these sectors.




                                       3
<PAGE>


         Amortization expenses increased to $ 304,158 in the three month period
ending July 31, 2004 compared to $ 284,926 in 2003 following the acquisition of
new machinery and equipment during the last fiscal year. As a percentage of
revenues, amortization expenses increased from 2.45% to 2.77%.

         Financing expenses decreased from $ 122,185 to $ 96,162 due mainly to a
lower prime rate (3.75% compared to 4.75% during the same period last fiscal
year). As a percentage of revenues, financing expenses decreased from 1.05% to
0.88%.

         Provisions for Income tax as a percentage of taxable income decreased
from 32.66% for the three months ended July 31, 2003 to 30.03% for 2004. Tax
expenses have decreased by $ 218,921 due to a decrease in taxable revenue.

         Net earnings before discontinued operations was $ 255,653. As a
percentage of sales, net earnings before discontinued operations decrease from
5.83% to 2.33%.

         Losses from discontinued operations net of taxes for the three month
period ending July 31, 2004 was $ 679,228 compared to $ 657,304 in the
corresponding period in 2003.

         Gain on disposal of discontinued operations was $ 550,677 in the three
month period ended July 31, 2004 compared to $ 48,320 in the corresponding
period in 2003. This increase is due to the disposal of Ipac 2000 Inc.

         As a result of the above factors, net earnings in the three month
period ending July 31, 2004 was $ 127,102 compared to earnings of $ 68,724 in
the corresponding period in 2003. The increase in earnings is due mainly to the
disposal of Ipac 2000 Inc.

LIQUIDITY AND CAPITAL RESOURCES

We had a negative net change in cash of $ 646,053 for the six month period ended
July 31, 2004. The principal source of cash was from accounts payable in the
amount of $ 1,567,993. The principal uses of cash was repayments of bank loans
in the amount of $ 2,059,016 repayment of long term debt of $ 1,166,513 and an
increase in accounts receivable in the amount of $ 1,425,720.

OFF-BALANCE SHEET ARRANGEMENTS

We do not have any off-balance sheet arrangements.

CONTRACTUAL OBLIGATIONS AND COMMERCIAL COMMITMENTS

Our significant contractual obligations as of July 31, 2004 are for debt and
operating leases. Debt by year of maturity and future rental payments under
operating lease agreements are presented below. As of July 31, 2004, we had an
outstanding balance on our line of credit of $ 11,943,203 and does not have any
purchase obligations. We have not engaged in off-balance sheet financing,
commodity contract trading or significant related party transactions.

<TABLE>
<CAPTION>
----------------------------------- -------------------------------------------------------------------------------
CONTRACTUAL OBLIGATIONS             PAYMENTS DUE BY PERIOD

----------------------------------- ----------------- ---------------- --------------- ------------- --------------
                                         Total          Less than 1      1-3 years      4-5 years    After 5 years
                                                           year
----------------------------------- ----------------- ---------------- --------------- ------------- --------------
<S>                                        <C>              <C>             <C>           <C>              <C>
Balance of Sale                              112,824           42,874          69,950          -             -
----------------------------------- ----------------- ---------------- --------------- ------------- --------------
Other long term debt                       5,102,135        1,098,525       2,194,913     1,639,654        169,043
----------------------------------- ----------------- ---------------- --------------- ------------- --------------
Total Long term debt                       5,214,959        1,141,399       2,264,863     1,639,654        169,043
----------------------------------- ----------------- ---------------- --------------- ------------- --------------
Operating lease                            3,378,032          705,650       1,409,880     1,262,502        -
----------------------------------- ----------------- ---------------- --------------- ------------- --------------
</TABLE>




                                       4
<PAGE>

Management believes that these commitments will be satisfied with current
operating cash flow.

ITEM 3.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Market Risk and Risk Management
We are exposed to fluctuations in foreign currency exchange rates and interest
rates. To manage certain of those exposures, we use futures, options and swaps.
The instruments we utilize in our hedging activities are viewed as risk
management tools, involve little complexity and are not used for trading or
speculative purposes. Management believes that we satisfactorily diversify the
counterparts used and monitor the concentration of risk to limit our counterpart
exposure.

Interest Rate Risk
We are exposed to market risk related to fluctuations in interest rates on its
debt. Increase in prevailing interest rates could increase our interest payment
obligations relating to variable rate debt. For example, a 100 basis point
increase in interest rates would increase annual interest expense by $125,000.

ITEM 4.  CONTROLS AND PROCEDURES

We believe it is critical to provide investors and other users of our financial
statements with information that is relevant, objective, understandable and
timely, so that they can make informed decisions. As a result, we have
established and we maintain accounting systems and practices and internal
control processes designed to provide reasonable assurance that transactions are
properly executed and recorded and that our policies and procedures are carried
out appropriately.

Our management team is committed to providing high-quality, relevant and timely
information about our businesses. Management performs reviews of each of our
businesses throughout the year, addressing issues ranging from financial
performance and strategy to personnel and compliance.

Management is responsible for implementing and maintaining adequate systems of
internal and disclosure controls and procedures and for monitoring their
effectiveness.

We evaluated the effectiveness of the design and operation of our "disclosure
controls and procedures" ("Disclosure Controls") pursuant to Rules 13a-14(c) of
the Securities Exchange Act of 1934, as amended (the "Exchange Act") and our
"internal controls and procedures for financial reporting" (Internal Controls)
as of the end of the period covered by this Quarterly Report on Form 10-Q. This
evaluation was done under the supervision and with the participation of
management.

         o        Disclosure Controls are procedures that are designed with the
                  objective of ensuring that information required to be
                  disclosed in our reports filed under the Exchange Act is
                  recorded, processed, summarized and reported within the time
                  periods specified in the SEC's rules and forms. Disclosure
                  Controls are also designed with the objective of ensuring that
                  such information is accumulated and communicated to our
                  management, including the Chief Executive Officer to allow
                  timely decisions regarding required disclosure.

         o        Internal Controls are procedures which are designed with the
                  objective of providing reasonable assurance that (1) our
                  transactions are properly authorized; (2) our assets are
                  safeguarded against unauthorized or improper use; and (3) our
                  transactions are properly recorded and reported, all to permit
                  the preparation of our financial statements in conformity with
                  generally accepted accounting principles in the United States
                  Of America.

There are inherent limitations to the effectiveness of any system of disclosure
controls and procedures, including the possibility of human error and the
circumvention or overriding of the controls and procedures. Accordingly, even
effective disclosure controls and procedures can only provide reasonable
assurance of achieving their control objectives.




                                       5
<PAGE>

Based upon our management's evaluation, our chief executive officer and chief
financial officer have concluded that, as of July 31, 2004, the disclosure and
internal accounting controls provide reasonable assurance that information
required to be disclosed in the reports that we file under the Exchange Act is
recorded, processed, summarized and reported as and when required, including
with specific reference that our assets are safeguarded, transactions are
executed in accordance with management's authorizations and the financial
records are reliable for the purpose of preparing financial statements.

There were no significant changes in our internal and disclosure controls or in
other factors that could significantly affect such internal and disclosure
controls subsequent to the date of their evaluation.

                            PART II OTHER INFORMATION


ITEM 1. LEGAL PROCEEDINGS
None.

ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS
None.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None.

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None.

ITEM 5. OTHER INFORMATION
None.

ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K

(a)      Exhibits

31.1     Certification of the Chief Executive Officer filed herewith pursuant to
         Section 302 of the Sarbanes-Oxley Act of 2002.

31.2     Certification of the Chief Financial Officer filed herewith pursuant to
         Section 302 of the Sarbanes-Oxley Act of 2002.

32.1     Certification of the Chief Executive Officer furnished herewith
         pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

32.2     Certification of the Chief Financial Officer furnished herewith
         pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

(b) Reports on Form 8-K

None.



                                       6
<PAGE>


                                   SIGNATURES

 Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, the Registrant has duly caused this report to be signed on its
behalf by the undersigned, thereunto duly authorized.

                                       DECTRON INTERNATIONALE INC.


September 14, 2004                     By: /s/ Mauro Parissi
                                           ----------------------------------
                                           Mauro Parissi
                                           Chief Financial Officer



                                       7

<PAGE>
















                           DECTRON INTERNATIONALE INC.
                    INTERIM CONSOLIDATED FINANCIAL STATEMENTS
                                  JULY 31, 2004



















<PAGE>






                           DECTRON INTERNATIONALE INC.
                    INTERIM CONSOLIDATED FINANCIAL STATEMENTS
                                  JULY 31, 2004





                                TABLE OF CONTENTS




Interim Consolidated Balance Sheets                                  F-2 - F-3

Interim Consolidated Statements of Earnings                          F-4 - F-5

Interim Consolidated Statements of Cash Flows                        F-6 - F-8

Interim Consolidated Statements of Stockholders' Equity                  F-9

Notes to Interim Consolidated Financial Statements                 F-10 - F-11




<PAGE>


DECTRON INTERNATIONALE INC.
INTERIM CONSOLIDATED BALANCE SHEETS
AS AT JULY 31, 2004 AND JANUARY 31, 2004
(Amounts Expressed in United States Dollars)                             PAGE 2
-------------------------------------------------------------------------------



<TABLE>
<CAPTION>
                                                                                   JULY 31, 2004      JANUARY 31, 2004
                                                                                 ----------------     ----------------

<S>                                                                              <C>                  <C>
 ASSETS

 CURRENT

      Cash                                                                       $      1,811,293     $      2,457,346
      Accounts receivable                                                              12,476,377           11,050,657
      Inventory                                                                         9,515,329            9,208,065
      Prepaid expenses and sundry assets                                                  773,140              685,142
      Loans receivable                                                                     17,706               17,769
      Current assets held by discontinued operations                                      192,071            1,313,625
                                                                                 ----------------     ----------------

                                                                                       24,785,916           24,732,604

 LOANS RECEIVABLE                                                                         594,954              576,816

 BALANCE OF SALES RECEIVABLES                                                             250,000                    -

 PROPERTY, PLANT AND EQUIPMENT                                                          7,341,313            7,904,410

 INTANGIBLES                                                                               91,160               91,310

 GOODWILL                                                                               1,550,817            1,556,319

 DEFERRED INCOME TAXES                                                                    374,784              375,613

 LONG-LIVED ASSETS HELD BY DISCONTINUED OPERATIONS                                      3,505,790            3,892,378
                                                                                 ----------------     ----------------

                                                                                 $     38,494,734     $     39,129,450
                                                                                 ================     ================
</TABLE>








The accompanying notes are an integral part of these consolidated financial
statements.

<PAGE>




DECTRON INTERNATIONALE INC.
INTERIM CONSOLIDATED BALANCE SHEETS
AS AT JULY 31, 2004 AND JANUARY 31, 2004
(Amounts Expressed in United States Dollars)                              PAGE 3
--------------------------------------------------------------------------------


<TABLE>
<CAPTION>

                                                                                 JULY 31, 2004      JANUARY 31, 2004
                                                                               ------------------   ------------------

<S>                                                                            <C>                  <C>
   LIABILITIES

 CURRENT

      Bank loans                                                               $    11,443,203      $    13,502,219
      Accounts payable and accrued expenses                                          6,520,065            4,952,072
      Income taxes payable                                                             457,254              359,605
      Current portion of long-term debt                                              1,141,399            1,226,865
      Deferred revenue                                                                   3,616                3,616
      Current liabilities held by discontinued operations                              425,602              402,889
                                                                               ------------------   ------------------

                                                                                    19,991,139           20,447,266

 LONG-TERM DEBT                                                                      4,073,560            5,154,607

 DEFERRED REVENUE                                                                    1,743,193            1,707,408
                                                                               ------------------   ------------------

                                                                                    25,807,892           27,309,281
                                                                               ------------------   ------------------

 STOCKHOLDERS' EQUITY

 CAPITAL STOCK                                                                       7,671,904            7,128,154

 TREASURY STOCK                                                                        (88,780)             (88,780)

 ACCUMULATED OTHER COMPREHENSIVE GAIN                                                1,647,241            1,564,072

 RETAINED EARNINGS                                                                   3,456,477            3,216,723
                                                                               ------------------   ------------------

                                                                                    12,686,842           11,820,169
                                                                               ------------------   ------------------

                                                                               $    38,494,734      $    39,129,450
                                                                               ==================   ==================
</TABLE>





The accompanying notes are an integral part of these consolidated financial
statements.

<PAGE>




DECTRON INTERNATIONALE INC.
INTERIM CONSOLIDATED STATEMENTS OF EARNINGS
FOR THE SIX MONTH PERIOD ENDED JULY 31, 2004 AND 2003
(Amounts Expressed in United States Dollars)                              PAGE 4
--------------------------------------------------------------------------------


<TABLE>
<CAPTION>
                                                                             SIX MONTH ENDED         SIX MONTH ENDED
                                                                              JULY 31, 2004           JULY 31, 2003
                                                                           --------------------    --------------------

<S>                                                                           <C>                   <C>
SALES                                                                         $    21,217,255       $    21,271,441

     Cost of sales                                                                 15,201,291            14,145,956
                                                                              ---------------       ---------------

GROSS PROFIT                                                                        6,015,964             7,125,485
                                                                              ---------------       ---------------

OPERATING EXPENSES

     Selling                                                                        2,411,180             2,649,759
     General and administrative                                                     1,456,886             1,595,594
     Depreciation and amortization                                                    618,736               598,558
     Interest expense                                                                 601,250               167,910
                                                                              ---------------       ---------------

                                                                                    5,088,052             5,011,821
                                                                              ---------------       ---------------

EARNING BEFORE INCOME TAXES AND DISCONTINUED OPERATIONS                               927,912             2,113,664

     Income taxes                                                                     289,029               673,674
                                                                              ---------------       ---------------

EARNINGS BEFORE DISCONTINUED OPERATIONS                                               638,883             1,439,990

     Loss from discontinued operations, net of tax                                   (949,805)           (1,359,816)
      Gain on disposal of discontinued operations,  net of
       tax                                                                            550,676                48,320
                                                                              ---------------       ---------------
NET EARNINGS                                                                  $       239,754       $       128,494
                                                                              ===============       ===============

NET EARNINGS (LOSS) PER COMMON SHARE, BASIC AND DILUTED
      Continuing operations                                                   $          0.21       $          0.49
      Discontinued operations                                                           (0.31)                (0.46)
      Disposal of discontinued operations                                                0.18                  0.01
                                                                              ---------------       ---------------
                                                                              $          0.08       $          0.04
                                                                              ===============       ===============
WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING

     Basic and Diluted                                                              2,977,734             2,944,561

</TABLE>


The accompanying notes are an integral part of these consolidated financial
statements.


<PAGE>

DECTRON INTERNATIONALE INC.
INTERIM CONSOLIDATED STATEMENTS OF EARNINGS
FOR THE THREE MONTH PERIOD ENDED JULY 31, 2004 AND 2003
(Amounts Expressed in United States Dollars)                              PAGE 5
-------------------------------------------------------------------------------


<TABLE>
<CAPTION>
                                                                                 THREE MONTH            THREE MONTH
                                                                                    ENDED                  ENDED
                                                                                JULY 31, 2004           JULY 31, 2003
                                                                             --------------------   --------------------

<S>                                                                             <C>                   <C>
SALES                                                                           $    10,988,159       $    11,619,589

     Cost of sales                                                                    8,242,634             7,996,761
                                                                                ---------------       ---------------
SS PROFIT                                                                             2,745,525             3,622,828
                                                                                ---------------       ---------------

OPERATING EXPENSES

     Selling                                                                          1,194,659             1,384,055
     General and administrative                                                         785,182               825,322
     Depreciation and amortization                                                      304,158               284,926
     Interest expense                                                                    96,162               122,185
                                                                                ---------------       ---------------
                                                                                      2,380,161             2,616,488
                                                                                ---------------       ---------------
EARNING BEFORE INCOME TAXES AND DISCONTINUED OPERATIONS                                 365,364             1,006,340

     Income taxes                                                                       109,711               328,632
                                                                                ---------------       ---------------

EARNINGS BEFORE DISCONTINUED OPERATIONS                                                 255,653               677,708

     Loss from discontinued operations, net of tax                                     (679,228)             (657,304)
      Gain on disposal of discontinued operations, net of tax                           550,677                48,320

                                                                                ===============       ===============
NET EARNINGS                                                                    $       127,102       $        68,724
                                                                                ===============       ===============

NET EARNINGS (LOSS) PER COMMON SHARE, BASIC AND DILUTED

      Continuing operations                                                     $          0.08       $          0.23
      Discontinued operations                                                             (0.21)                (0.22)
        Disposal of discontinued operations                                                0.17                  0.01
                                                                                ---------------       ---------------
                                                                                $          0.04       $          0.02
                                                                                ===============       ===============
WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING
     Basic and diluted                                                                3,155,000             2,944,561
</TABLE>




The accompanying notes are an integral part of these consolidated financial
statements.


<PAGE>




DECTRON INTERNATIONALE INC.
INTERIM CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE SIX MONTH PERIOD ENDED JULY 31, 2004 AND 2003
(Amounts Expressed in United States Dollars)                              PAGE 6
--------------------------------------------------------------------------------



<TABLE>
<CAPTION>
                                                                                   SIX MONTH                  SIX MONTH
                                                                                     ENDED                      ENDED
                                                                                  JULY 31, 2004             JULY 31, 2003
                                                                               ----------------------    ---------------------
<S>                                                                                 <C>                   <C>
OPERATING ACTIVITIES

Net earnings from continuing operations                                             $       638,883       $     1,439,990

Adjustments to reconcile net earnings to net cash provided by (used in)
operating activities:
     Depreciation and amortization                                                          618,736               598,558
     Increase in accounts receivable                                                     (1,425,720)           (2,098,966)
     Increase in inventory                                                                 (307,264)           (2,250,482)
     Increase in prepaid expenses and sundry assets                                         (87,998)             (234,331)
     Decrease in deferred income taxes                                                          829                75,573
     Increase in accounts payable and accrued expenses                                    1,567,993             1,664,502
     Increase (decrease) in income taxes payable                                             97,649               (27,640)
     Increase in deferred revenue                                                            35,785               106,463
                                                                                    ---------------       ---------------

Net cash provided by operating activities                                                 1,138,893              (726,333)
                                                                                    ---------------       ---------------
</TABLE>



















The accompanying notes are an integral part of these consolidated financial
statements.



<PAGE>




DECTRON INTERNATIONALE INC.
INTERIM CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED)
FOR THE SIX MONTH PERIOD ENDED JULY 31, 2004 AND 2003
(Amounts Expressed in United States Dollars)                              PAGE 7
--------------------------------------------------------------------------------



<TABLE>
<CAPTION>
                                                                               SIX MONTH ENDED        SIX MONTH ENDED
                                                                                JULY 31, 2004          JULY 31, 2003
                                                                             --------------------    -------------------
<S>                                                                                  <C>                      <C>
  INVESTING ACTIVITIES

     Acquisition of property, plant and equipment                                      (228,687)           (1,088,027)
                                                                                ---------------       ---------------

Net cash used in investing activities                                                  (228,687)           (1,088,027)
                                                                                ---------------       ---------------

FINANCING ACTIVITIES

     Advances to loans receivable                                                       (18,075)               (9,985)
     Advances from (repayments of) bank loans                                        (2,059,016)            3,292,721
     Net advances from (repayments of) long-term debt                                (1,166,513)              103,712
     Issuance of shares                                                                 543,750                96,000
     Advances for share purchase plan receivable                                             --              (106,404)
     Advances from balance of sales                                                    (250,000)              234,908
                                                                                ---------------       ---------------

Net cash provided by (used in) financing activities                                  (2,949,854)            3,610,952
                                                                                ---------------       ---------------

EFFECT OF FOREIGN CURRENCY EXCHANGE RATE ON CASH AND CASH
EQUIVALENTS                                                                             261,869               256,126
                                                                                ---------------       ---------------

EFFECT OF DISCONTINUED OPERATIONS                                                     1,131,726            (1,063,759)
                                                                                ---------------       ---------------
</TABLE>









The accompanying notes are an integral part of these consolidated financial
statements.



<PAGE>




DECTRON INTERNATIONALE INC.
INTERIM CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED)
FOR THE SIX MONTH PERIOD ENDED JULY 31, 2004 AND 2003
(Amounts Expressed in United States Dollars)                              PAGE 8
--------------------------------------------------------------------------------



<TABLE>
<CAPTION>
                                                                                 SIX MONTH ENDED       SIX MONTH ENDED
                                                                                  JULY 31, 2004         JULY 31, 2003
                                                                               --------------------   -------------------

<S>                                                                               <C>                  <C>
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS                                     (646,053)             988,959

CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR                                            2,457,346              816,009
                                                                                  ---------------      ---------------

CASH AND CASH EQUIVALENTS, END OF PERIOD                                          $     1,811,293      $     1,804,968
                                                                                  ===============      ===============

SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:

     INTEREST PAID                                                                $       479,849      $       490,393
                                                                                  ===============      ===============

     INCOME TAXES PAID                                                            $       187,969      $       159,088
                                                                                  ===============      ===============
</TABLE>





















The accompanying notes are an integral part of these consolidated financial
statements.



<PAGE>




DECTRON INTERNATIONALE INC.
INTERIM CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
FOR THE SIX MONTH PERIOD ENDED JULY 31, 2004
(Amounts Expressed in United States Dollars)                              PAGE 9
--------------------------------------------------------------------------------



<TABLE>
<CAPTION>
                                                                        CUMULATIVE           OTHER
                                                                         RETAINED        COMPREHENSIVE        TREASURY
                                   NUMBER              AMOUNT            EARNINGS            INCOME             STOCK
                                ----------------   ---------------   -----------------  -----------------  ----------------

<S>                                  <C>            <C>               <C>               <C>                 <C>
Balance January 31, 2001              2,795,000      $   6,718,510     $   3,730,950     $     (14,735)      $     (88,780)
                                  =============      =============     =============     =============       =============

Share purchase plan
receivable                                   --      $      34,423     $          --     $          --       $          --
Foreign currency translation                 --                 --                --          (577,087)                 --
Net earnings for the year                    --                 --            47,065                --                  --
                                  -------------      -------------     -------------     -------------       -------------

Balance January 31, 2002              2,795,000      $   6,752,933     $   3,778,015     $    (591,822)      $     (88,780)
                                  =============      =============     =============     =============       =============

Share purchase plan
receivable                                   --      $    (119,010)    $          --     $          --       $          --
Issuance of shares                      124,500            502,300                --                --                  --
Foreign currency translation                 --                 --                --           463,058                  --
Net earnings for the year                    --                 --         1,136,212                --                  --
                                  -------------      -------------     -------------     -------------       -------------

Balance January 31, 2003              2,919,500      $   7,136,223     $   4,914,227     $    (128,764)      $     (88,780)
                                  =============      =============     =============     =============       =============

Share purchase plan
receivable                                   --      $    (170,819)    $          --     $          --       $          --
Issuance of shares                       54,250            162,750                --                --                  --
Foreign currency translation                 --                 --                --         1,692,836                  --
Net loss for the year                        --                 --        (1,697,504)               --                  --
                                  -------------      -------------     -------------     -------------       -------------

Balance, January 31, 2004             2,973,750      $   7,128,154     $   3,216,723     $   1,564,072       $     (88,780)
                                  =============      =============     =============     =============       =============

Share purchase plan
receivable                                   --      $          --     $          --     $          --       $          --
Issuance of shares                      181,250            543,750                --                --                  --
Foreign currency translation                 --                 --                --            83,169                  --
Net earnings for the period                  --                 --           239,754                --                  --
                                  -------------      -------------     -------------     -------------       -------------

Balance, July 31, 2004                3,155,000      $   7,671,904     $   3,456,477     $   1,647,241       $     (88,780)
                                  =============      =============     =============     =============       =============
</TABLE>


The accompanying notes are an integral part of these consolidated financial
statements.



<PAGE>





DECTRON INTERNATIONALE INC.
NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS
JULY 31, 2004 AND JANUARY 31, 2004
(Amounts Expressed in United States Dollars)                             PAGE 10
--------------------------------------------------------------------------------



1.    SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

      a) BASIS OF CONSOLIDATED FINANCIAL STATEMENTS PRESENTATION

         These consolidated financial statements include the accounts of Dectron
         Internationale Inc., Dectron Inc. Consolidated,Circul-aire Group and
         International Water Makers Inc.

         Dectron Inc. Consolidated is comprised of Dectron Inc. and of its
         wholly-owned subsidiaries, Refplus Inc., Thermoplus Air Inc., Dectron
         U.S.A. Inc., and IPAC 2000 Inc.

         Circul-aire Group is comprised of Cascade Technologies Inc., and of its
         wholly-owned subsidiaries, Purafil Canada Inc. and Circul-aire Inc. and
         its wholly-owned subsidiary Tranzmetal Inc.

         All inter-company profits, transactions and account balances have been
         eliminated.



      b) FOREIGN CURRENCY TRANSLATION

         The company maintains its books and records in Canadian dollars. The
         operation of the company's subsidiary in the United States is an
         integrated corporation. As a result, monetary assets and liabilities in
         foreign currency are translated into Canadian dollars at exchange rates
         in effect at the balance sheet date, whereas non-monetary assets and
         liabilities are translated at the average exchange rates in effect at
         transaction dates. Income and expenses in foreign currency are
         translated at the average rate effective during the year with the
         exception of depreciation and amortization, which is translated at the
         historical rate. Gains and losses resulting from the translation of
         foreign currency transactions are included in earnings.

         The translation of the financial statements from Canadian dollars into
         United States dollars is performed for the convenience of the reader.
         Balance sheet accounts are translated using closing exchange rates in
         effect at the balance sheet date and income and expense accounts are
         translated using an average exchange rate prevailing during each
         reporting period. No representation is made that the Canadian dollar
         amounts could have been, or could be, converted into United States
         dollars at the rates on the respective dates and or at any other
         certain rates. Adjustments resulting from the translation are included
         in the accumulated other comprehensive income in stockholder's equity.




<PAGE>




DECTRON INTERNATIONALE INC.
NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS
JULY 31, 2004 AND JANUARY 31, 2004
(Amounts Expressed in United States Dollars)                             PAGE 11
--------------------------------------------------------------------------------





<TABLE>
<CAPTION>
      2.  SEGMENTED INFORMATION


                                                                                      JULY 31,             JANUARY 31,
                                                                                        2004                  2004
                                                                                 -------------------    ------------------

<S>                                                                              <C>                    <C>
      a)  The breakdown of sales by geographic area is as follows:

          Canada                                                                 $       11,715,037     $       18,073,085
          United States of America                                                        8,572,601             19,799,256
          International                                                                     929,617              1,782,581
                                                                                 ------------------     ------------------

                                                                                 $       21,217,255     $       39,654,922
                                                                                 ==================     ==================

      b)  The breakdown of identifiable assets by geographic area are as
          follows:

          Canada                                                                 $       32,937,842     $       33,334,783
          United States                                                                   5,556,892              5,794,667
                                                                                 ------------------     ------------------

                                                                                 $       38,494,734     $       39,129,450
                                                                                ===================     ==================
</TABLE>